Self Storare: Virtus targets $150 million in self-storage purchases in 2011

By Shonda Novak for Statesman Business Blog

Virtus Real Estate, an Austin-based real estate private equity firm, plans to acquire about $150 million in self-storage properties in 2011 and start a new student housing fund, the company said in a news release.

This year, Virtus bought 20 self-storage properties, all in the southeastern United States, for nearly $50 million. The properties totaled 1 million square square feet of rentable space. The company said the acquisitions are part of its efforts to leverage key demographic trends in the national economy.

“In times of fiscal decline, the self-storage market has demonstrated resilience, while also posting solid gains throughout economic resurgence,” said Terrell Gates, CEO and founder of Virtus.

Virtus closed a $40 million fund this year and started another $100 million storage fund to be raised next year.

In addition to the $150 million Virtus plans to spend on storage properties, the company said it intends to spend $100 million on student housing projects in 2011.

In 2012, Virtus plans to raise a $500 million fund. That fund, Gates said, “will be diversified with all four recession resistant asset classes we target, such as self-storage, student housing, senior housing and medical office properties.”

The most recent self-storage investment fund purchases have focused on cash-flowing self-storage assets in major metro areas including Memphis, Nashville, Knoxville, Baton Rouge and Atlanta.

Since 2003, Virtus has purchased 125 properties nationwide for nearly $1.6 billion. The only property acquired in Austin was a three-building office complex on Bee Cave Road where Virtus has its corporate offices.

“We bought it in 2006 when the occupancy was at 60 percent with below market rental rates, executed a value-add strategy to improve management and increase the quality of the property ultimately leading to 100 percent occupancy where it remains today,” Gates said.


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